Tokenstars ACE

ICO Analysis: Tokenstars ACE The contents of this publication are presented for informational purposes only and should not be considered legal or financial advice. DESCRIPTION TokenStars is a sports agency that aims to disrupt the way tennis players are recruited and advertised, using a global network of scouts and promoters as well as elements of decentralized management. MARKET The sports agency market is relatively big and profitable, and the best players earn hundreds of millions of dollars a year. Tennis has a small market share with only three out of forty biggest companies engaged. The unquestioned leader in this particular industry is the IMG agency that operates in a wide range of countries and has the biggest network of contacts. How does it work? In tennis, agents come to talented players when those are 13–14 years old, and it's time to decide as to whether continue the path to the big sport or not. To pursue a professional career, a junior player needs to incur costs of $100,000 annually. Most of these funds are spent on a few essential aspects of an athlete's development, such as participating in tournaments to improve ranking, joining a tennis academy or training with a coach, and purchasing the equipment. Grants and advertising contracts can cover the expenditures only partially. That's why sports agencies play a huge role. If a junior player performs well at the tournaments, they might be offered some long-term contracts by the age of 18, which would support them financially. Soon, a junior player becomes a pro, and their commercial success depends heavily on the ranking position. The main source of a tennis player's income is prize money. On the graph below one could see that tournament gains of players holding 11–20 positions are several times lower than those of "stars." If we go further, we'll see that this gap only increases—those out of top 200 would hardly make it to $1 million during the whole career. Earnings of top 32 athletes in different kinds of sports as of 2014 The bigger part of a sportsman's income consists of advertising/sponsorship deals which might generate 3–5 times as much money as successfully competing in tournaments. Nevertheless, stars make way more money—Roger Federer's revenue amounted to $54m back in 2016, while players from mid-top 200 managed to earn only $250–400K. At the professional level, agencies assist players in signing advertising contracts, PR activities, and reaching other commercial goals, demanding a 10% fee for their services. Pros: + In 2010—2016, the volume of tennis sponsorship payments across the world had been experiencing a steady rise (from $600M to $800M). + There's only one major competitor in the market, IMG, and it's focused not only on tennis but also a host of other kinds of sports. + According to the TokenStars team, IMG has certain flaws in the selection of players and misses out on young talents from "non-tennis" countries. + Unlike soccer, there's no analytical approach towards talent search in tennis at the moment. As per soccer, the InStat company provides detailed data on each player, which is then broadly used by the teams. As per tennis, agents still rely on their flair and the subjective opinion. + In numerous countries, the regulatory framework for tennis agencies is not as strict as for other sports. Cons: — An enormous income gap between "stars" and other professional players increases the risk for the agency. A player should at least be included in top 200 so that they could cover their own expenses. Moreover, tennis is considered to be one of the most expensive sports for junior players. — IMG has succeeded in some other fields such as fashion, media, and event organization, which enables its clients to make even more money. — IMG has its own tennis academy with a rich history that produces star players. — IMG agents have a significant network of contacts in each country, including tennis federations that let them know if there is a new gifted player. COMPANY TokenStars ACE is a sports agency as well, and it will embrace the new methods of working with both young talents and professional players. The mechanism for acquiring young players will consist of the following parts: § Global scout network. Instead of a limited number of full-time employees, the company will attract analysts from the whole world, who will track local players' performance, send their applications to TokenStars, and participate in their skills assessment. § Global promoter network. They will promote players' social media accounts, publish articles in the local media, and attract advertisers. § Decentralized management. For making some key operational decisions, the company will use the community voting mechanism. § The TokenStars team. For the mechanism to work efficiently, the company will employ a few professional scouts and establish a small department that will be engaged in attracting brands and advertising agencies. Apart from the primary task of searching junior players, the team will also provide professional players with advertising opportunities. TokenStars claims that ≈20% of those within top 300 do not have any contracts with traditional agencies at all and some players are ready to be signed by another company. Scouting model The talent search process will be carried out in a few steps: 1. A scout analyzes the data, detects the players with the highest potential, and sends the application to the company's employees. If it's approved, a scout will receive $900. 2. Upon the approval, a scout will locally assess the player's skills with the use of modern equipment and fill out a particular internal form with the preset parameters. For this report, a scout will receive $500. 3. Token holders vote to decide whether to sign a player. If the majority votes yes, a scout will receive an additional $8,500. All payments will be made in tokens at the actual exchange rate on the day. Regarding the role of scout, it may be carried out by player's parents or coach. What advantages does this model have? § In "non-tennis" countries, the total bonus of $10,000 can be compared with coach's annual salary. This fact alone is a great incentive to try out a role of scout. § The cost of maintaining a global scout network is far less than that of the team of full-time agents. According to TokenStars, the team of 60 agents would cost a company approximately $4M a year, not including flights. § A scout gathers the unique data about the player that has a significant impact on determining their potential (for voters). It allows for better scaling of the talent search, reducing the influence of the "intuition." What disadvantages does this model have? § It's important not only to find a talent but also persuade them and their parents to sign a contract (in case the application is not sent by parents themselves). A professional agent has both relevant experience and expertise in behaving in such situations, knows what to say, etc. Besides, a player will personally work with them in the future. § At the first stage, the applications are reviewed by a few employees who themselves make a decision. The data arrives later. § Some subjective factors are coming into play when evaluating the player. These factors won't be taken into account when filling out the form, or the whole assessment will be based upon scout's personal point of view. § If parents act as scouts, their primary objective will be to promote their child no matter the skills. This may lead to the influx of low-quality applications. § If a scout sends the application without telling the parents (so that they don't do it themselves), the system will have players who are not actually ready to be signed. Promoters They'll have three responsibilities: 1. Promoting player's social media fan accounts—i.e., regularly updating them with the content about the player and widening the fanbase. If the community isn't satisfied with the promoter's performance, the latter might lose their vote. A promoter will receive $100/account per social media network. 2. Acting as PR representatives (using press kits developed by ACE) and promoting players in the local media outlets. A promoter will receive $100 per publication. 3. Attracting advertisers with the use of ACE's materials. A promoter will receive $200 if the advertiser succeeds at the first stage, 10% of the sum of the first contract, and 2% of each subsequent contract. The white paper says that the vacancies will be published on the TokenStars website, and token holders will be given priority. What advantages does this model have? § TokenStars will pay promoters only if the requirements are met, so it's an additional advantage for the company without incurring any financial risk. § Promoters can reach out to a significant number of small- and medium-sized advertisers who can still be useful for players. § Promoters will potentially cover the local press for additional PR. The point is that usually there's no much time to collaborate with those. What disadvantages does this model have? § A promoter takes their time to contact an advertiser without knowing whether they will be approved by the company and whether there will be many players who would agree to work with those advertisers. § Attracting an advertiser (especially with a good budget) is no easy task. It's not clear what group of people could be attracted by the proposed reward and if they will be able to fulfill the task. Taking a closer look at the first responsibility — SMM — is vital.

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